Ireland is currently debating reforms to reduce tax on investment and potentially introduce a new retail savings and investment framework.
This is a welcome development and something we have long been campaigning for.
Irish households hold very substantial savings in low-yield deposits, while SMEs, housing projects and growing businesses continue to rely heavily on bank funding. Encouraging greater retail participation in investment markets is sensible policy.
But the detail of reform matters.
Because not all “investment” supports the real economy in the same way.
The European Context: The Savings & Investments Union (SIU)
At EU level, the new Savings & Investments Union (SIU) strategy has a clear objective:
- Mobilise household savings
- Deepen European capital markets
- Reduce dependence on bank lending
- Channel capital into productive economic activity
The SIU is not simply about increasing stock market participation. It is about capital formation, ensuring that savings flow into businesses, infrastructure, housing, and innovation.
Ireland’s current discussion on retail investment reform sits directly within that broader European policy framework.
The question is whether national tax design will fully align with that objective.
Lower Tax on Stock Market Investing ≠ More Real-Economy Funding
When a retail investor buys listed shares on a stock exchange, they are typically purchasing from another investor in the secondary market.
That transaction:
- Improves liquidity
- Supports price discovery
- Benefits capital markets
But in most cases, it does not provide new capital to the company.
By contrast, when capital flows through regulated lending platforms:
- Funds go directly to SMEs, developers, and operating businesses
- Housing projects are financed
- Regional economic activity is supported
- New capital is formed
That is primary economic funding.
If the policy objective is simply to increase retail investing, lowering tax on stock market activity may achieve that.
If the objective is to support the real economy — as the SIU clearly intends — then direct capital deployment mechanisms must also be included.
The Current Irish Tax Distortion
Under existing Irish tax rules:
- Returns from regulated P2P and crowdfunding platforms are treated as unearned income
- Taxed at marginal income tax rates (including USC and PRSI)
- Effective rates can exceed 50%
Meanwhile:
- Equities are taxed at 33% CGT
- Funds are taxed at 38% exit tax
- Pensions receive significant tax advantages
This creates a structural imbalance where direct lending into SMEs and housing can be less tax-efficient than secondary market trading.
That outcome is difficult to reconcile with the objectives of both Ireland’s housing policy and the EU’s Savings & Investments Union.
Why Inclusion Matters for Policy Coherence
Regulated crowdfunding platforms operate under the EU Crowdfunding Service Providers (ECSP) Regulation. They are part of Europe’s capital markets architecture.
If Ireland introduces:
- A tax-advantaged retail investment account, or
- A revised investment income framework,
then excluding regulated real-economy lending would risk undermining the broader SIU objective.
This is not about seeking preferential treatment.
It is about ensuring tax neutrality between different forms of risk-based investment, particularly where capital is deployed directly into productive activity.
A Strategic Opportunity for Ireland
Ireland has the opportunity to:
- Align national tax reform with EU capital markets strategy
- Support non-bank SME finance
- Encourage domestic capital formation
- Strengthen housing delivery funding channels
Encouraging investment is good policy.
Encouraging investment that directly funds the real economy — in line with the Savings & Investments Union — is better policy.
The direction of travel is positive. The design choices will determine whether retail capital fuels secondary trading activity — or supports productive Irish assets.
Now is the moment to ensure those objectives are aligned.
This Is About Alignment, Not Advantage
The argument is not that equities should be penalised.
It is that regulated, risk-based lending into SMEs and housing should not be structurally disadvantaged relative to passive secondary market investing.
If we want to:
- Increase housing supply,
- Improve SME funding access,
- Build domestic capital resilience,
- And align with EU strategy,
then retail investment reform must reflect where capital is most economically impactful.
Encouraging investment is good policy. Ensuring that investment reaches the real economy is better policy.
Written by David Jelly
Founder, Property Bridges
www.propertybridges.com
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